American Airlines second-quarter earnings: just how bad was the lockdown?

When is the American Airlines earnings date?

The second-quarter (Q2) American Airlines earnings date is scheduled for 23 July.

American Airlines earnings – what does Wall Street expect?

American Airlines have endured a torrid Q2, with the company building on an already tough Q1 to reflect what is likely to be possibly the worst three-month period in living memory.

With coronavirus lockdowns in place around the world, and with US travel restricted heavily throughout the period in question, a huge decline in financials are almost guaranteed. Markets currently expect to see an American Airlines earnings per share (EPS) net loss of $7.27; down from a negative $2.27 EPS in Q1.

Revenues are also expected to suffer, with the Q1 figure of $8.51 billion expected to shrink 88% to result in an American Airlines revenue figure closer to $1.35 billion. Following years of steady revenue growth, Q2 is expected to be the worst for the airline as operations ground to a halt. Therefore, while these numbers are undoubtedly going to be shocking by historical standard, it is widely expected that this will be the bottom for a company that hopes to stage a recovery in the second half of the year.

Unfortunately this period is likely to be a financial strain, with the company expected to post a second consecutive quarter of losses. With many believing that we could see an airline go bust throughout this crisis, the size of the loss will be crucial. As things stand, markets are expecting a pre-tax loss of $3.8 billion, with the post-tax net income predicted to show a loss of $2.98 billion.

How to trade American Airlines Q2 results

At present, of the 18 analysts covering American Airlines, four have ‘buy’ recommendations, while there are six ‘holds’ and eight ‘sells’. The median target price is $13.00, around 9% higher than the current price of $11.93.

The week that followed the Q1 results witnessed a decline of 19.7% for the stock price.

American Airlines share price: technical analysis

After a sharp rally in early June, we have seen the stock tumble into the 76.4% Fibonacci support level at $11.68. This recent pullback could be a buying opportunity if we see earnings outperform, with a drop back below the May low of $8.25 required to highlight the possibility that the worst is not over for the stock.

Until then, the declines we are currently seeing could be a buying opportunity for those that believe that company will emerge out the other side in a strong position.

Looking at the four-hour chart, we can see a downtrend in play, with the price heading lower once more. With that in mind, any bullish positions would be preferred upon seeing a break through the previous swing high (currently $14.28). Until then, short-term declines could persist.

American Airlines losing altitude

With Q2 losses expected to be pretty hefty, investors will be keeping a close eye out for exactly how much the lockdown hurt the firm. Given current declines across the sector, fears over the potential for further lockdowns in the US are certainly hurting sentiment around the reopening of both domestic and international flight routes.

With growth stocks significantly outperforming value over the course of this crisis, we may need some fairly concrete improvements to bring confidence that this stock is going to establish a strong uptrend from here.